[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]
H.R. 2941--BROWNFIELDS REDEVELOPMENT ENHANCEMENT ACT
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
HOUSING AND COMMUNITY OPPORTUNITY
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
SECOND SESSION
__________
MARCH 6, 2002
__________
Printed for the use of the Committee on Financial Services
Serial No. 107-59
U.S. GOVERNMENT PRINTING OFFICE
78-502 WASHINGTON : 2002
________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
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HOUSE COMMITTEE ON FINANCIAL SERVICES
MICHAEL G. OXLEY, Ohio, Chairman
JAMES A. LEACH, Iowa JOHN J. LaFALCE, New York
MARGE ROUKEMA, New Jersey, Vice BARNEY FRANK, Massachusetts
Chair PAUL E. KANJORSKI, Pennsylvania
DOUG BEREUTER, Nebraska MAXINE WATERS, California
RICHARD H. BAKER, Louisiana CAROLYN B. MALONEY, New York
SPENCER BACHUS, Alabama LUIS V. GUTIERREZ, Illinois
MICHAEL N. CASTLE, Delaware NYDIA M. VELAZQUEZ, New York
PETER T. KING, New York MELVIN L. WATT, North Carolina
EDWARD R. ROYCE, California GARY L. ACKERMAN, New York
FRANK D. LUCAS, Oklahoma KEN BENTSEN, Texas
ROBERT W. NEY, Ohio JAMES H. MALONEY, Connecticut
BOB BARR, Georgia DARLENE HOOLEY, Oregon
SUE W. KELLY, New York JULIA CARSON, Indiana
RON PAUL, Texas BRAD SHERMAN, California
PAUL E. GILLMOR, Ohio MAX SANDLIN, Texas
CHRISTOPHER COX, California GREGORY W. MEEKS, New York
DAVE WELDON, Florida BARBARA LEE, California
JIM RYUN, Kansas FRANK MASCARA, Pennsylvania
BOB RILEY, Alabama JAY INSLEE, Washington
STEVEN C. LaTOURETTE, Ohio JANICE D. SCHAKOWSKY, Illinois
DONALD A. MANZULLO, Illinois DENNIS MOORE, Kansas
WALTER B. JONES, North Carolina CHARLES A. GONZALEZ, Texas
DOUG OSE, California STEPHANIE TUBBS JONES, Ohio
JUDY BIGGERT, Illinois MICHAEL E. CAPUANO, Massachusetts
MARK GREEN, Wisconsin HAROLD E. FORD Jr., Tennessee
PATRICK J. TOOMEY, Pennsylvania RUBEN HINOJOSA, Texas
CHRISTOPHER SHAYS, Connecticut KEN LUCAS, Kentucky
JOHN B. SHADEGG, Arizona RONNIE SHOWS, Mississippi
VITO FOSSELLA, New York JOSEPH CROWLEY, New York
GARY G. MILLER, California WILLIAM LACY CLAY, Missouri
ERIC CANTOR, Virginia STEVE ISRAEL, New York
FELIX J. GRUCCI, Jr., New York MIKE ROSS, Arizona
MELISSA A. HART, Pennsylvania
SHELLEY MOORE CAPITO, West Virginia BERNARD SANDERS, Vermont
MIKE FERGUSON, New Jersey
MIKE ROGERS, Michigan
PATRICK J. TIBERI, Ohio
Terry Haines, Chief Counsel and Staff Director
Subcommittee on Housing and Community Opportunity
MARGE ROUKEMA, New Jersey, Chair
MARK GREEN, Wisconsin, Vice BARNEY FRANK, Massachusetts
Chairman NYDIA M. VELAZQUEZ, New York
DOUG BEREUTER, Nebraska JULIA CARSON, Indiana
SPENCER BACHUS, Alabama BARBARA LEE, California
PETER T. KING, New York JANICE D. SCHAKOWSKY, Illinois
ROBERT W. NEY, Ohio STEPHANIE TUBBS JONES, Ohio
BOB BARR, Georgia MICHAEL E. CAPUANO, Massachusetts
SUE W. KELLY, New York MAXINE WATERS, California
BOB RILEY, Alabama BERNARD SANDERS, Vermont
GARY G. MILLER, California MELVIN L. WATT, North Carolina
ERIC CANTOR, Virginia WILLIAM LACY CLAY, Missouri
FELIX J. GRUCCI, Jr, New York STEVE ISRAEL, New York
MIKE ROGERS, Michigan
PATRICK J. TIBERI, Ohio
C O N T E N T S
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Page
Hearing held on:
March 6, 2002................................................ 1
Appendix:
March 6, 2002................................................ 35
WITNESSES
Wednesday, March 6, 2002
Bartsch, Charles, Director of Brownfield Financing Studies,
Northeast-
Midwest Institute.............................................. 23
Bernardi, Hon. Roy A., Assistant Secretary, U.S. Department of
Housing and Urban Development.................................. 9
Colangelo, Robert, Executive Director, National Brownfield
Association.................................................... 27
Kalisz, Frederick M., Jr., Mayor, City of New Bedford,
Massachusetts.................................................. 21
Kasko, Charles, Regional Sales Manager, Avis America, on behalf
of the National Association of Home Builders................... 29
Murphy, John C., Executive Director, National Association for
County
Community and Economic Development, on behalf of the National
Community Development Association.............................. 26
Reid, Hon. Lydia, Mayor, City of Mansfield, Ohio................. 19
APPENDIX
Prepared statements:
Roukema, Hon. Marge.......................................... 36
Oxley, Hon. Michael G........................................ 38
Barr, Hon. Bob............................................... 40
Carson, Hon. Julia........................................... 41
Israel, Hon. Steve........................................... 42
Kelly, Hon. Sue.............................................. 43
Bartsch, Charles............................................. 44
Bernardi, Hon. Roy A......................................... 49
Colangelo, Robert............................................ 53
Kalisz, Frederick M., Jr..................................... 55
Kasko, Charles............................................... 60
Murphy, John C............................................... 65
Reid, Hon. Lydia............................................. 68
H.R. 2941--BROWNFIELDS REDEVELOPMENT ENHANCEMENT ACT
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WEDNESDAY, MARCH 6, 2002
U.S. House of Representatives,
Subcommittee on Housing and
Community Opportunity,
Committee on Financial Services,
Washington, DC.
The subcommittee met, pursuant to call, at 10:05 a.m. in
room 2128, Rayburn House Office Building, Hon. Marge Roukema,
[chairwoman of the subcommittee], presiding.
Present: Chairwoman Roukema; Representatives Kelly, Oxley,
Miller, Grucci, Tiberi, Frank, Carson, Jones, Capuano, Clay,
Israel, and C. Maloney of New York.
Chairwoman Roukema. May I have your attention? I apologize
for the delay here, but I believe that we should wait a few
more minutes. I am told that some Members on the Democratic
side of the panel will be here, but let's be patient and have
another minute or two or three, hopefully before we get
started. Thank you, I appreciate your patience.
The hearing will come to order. I will open the hearing
with opening statements and then greet the panelists and
introduce those panelists. I certainly thank all of you for
coming today and I would hope that other Members will be here.
I know there is intense interest on this legislation. It's not
highly controversial, but there is intense interest, not only
on a regional basis, but across the country, and I want to
especially state that it's important for the State of New
Jersey, but that's only one of 50. But I will be working with
all of you to deal with the problems, the technicalities, not
the problems, but the technicalities as they may arise.
This hearing today on H.R. 2941, Brownfields Redevelopment
Enhancement Act, was introduced by our colleague and panel
member here, Congressman Gary Miller from California, and we do
appreciate his leadership here.
Today, local communities and States are eagerly looking for
ways to clean up and redevelop their brownfield sites and
certainly it's an idea whose time has come and perhaps overdue.
It's incredible to think that there are an estimated 500,000
brownfields in existence today across the country. That's a
horrific number, a number that you can hardly comprehend. But
the brownfield sites are sites where redevelopment is
complicated by potential environmental contamination, but that
are less seriously contaminated than those that are covered
under the Superfund Act. And may I just say parenthetically
here I am a strong environmentalist and certainly in a State
like New Jersey I am strong, so I don't want anything here to
be considered as anti-environmental. We have to be intelligent
about how we deal with this subject and protect all sides of
the issue.
No matter how these areas are classified, there are
possible health hazards and eyesores in the communities that
can be cleaned up, but redevelopment of these sites will go a
long way toward revitalizing the communities around. And as I
say, they are not mutually exclusive. It's our job here in this
legislation to accommodate and get the best of both worlds so
to speak.
While some States have established programs to encourage
brownfields cleanup and redevelopment, the liability involving
the sites remain controlled by the strict standards of the
Superfund law. Investors and developers have therefore been
reluctant to purchase brownfield sites out of concern that they
will become entangled in legal disputes and be forced to pay
for the unexpected cleanups.
On January 11th of this year, President Bush signed the
Small Business Liability Relief and Brownfields Revitalization
Act, which provides for up to $200 million a year to States,
local governments and Indian tribes for brownfield cleanups.
That legislation more than doubles the $92 million spent
annually for cleanups up to this point.
The liability measure within the bill--now this is
important--the liability measure within the bill protects the
new owners of restored brownfields from having to pay any
future cleanup costs. The legislation also calls for the
creation of a public record of brownfield sites and encourages
community involvement in cleanup and reuse. It authorizes $50
million a year for grants to local and State governments to
start and enhance brownfield programs.
While this bill that was signed by the President has been
widely hailed as a valuable step forward. H.R. 2449, the
legislation under review today, is complementary and
supplementary legislation which addresses another facet of the
brownfields redevelopment needs. H.R. 2941, introduced again by
our colleague, Congressman Miller of California, focuses on
providing access to capital for local entities that
traditionally have had trouble obtaining financing for
brownfield redevelopment activities. Most notably, this bill
authorizes appropriations for BEDI, Brownfields Economic
Development Initiative. This program, for the first time,
eliminates the requirement that local governments obtain
Section 108 loan guarantees as a condition for receiving the
BEDI grant funding.
Delinking brownfields economic development initiative
grants from Section 108 loan guarantees is important because
some cities, some small cities, that is, have great difficulty
in securing and are unable to secure those guarantees, the
Section 108 guarantees. The current requirement that cities
must leverage their CDBG funds in order to receive brownfields
grants has discouraged many of our smaller communities from
applying for the grants.
H.R. 2941 takes at least two other important steps. First,
the bill authorizes appropriation for BEDI program for the
first time, and second the bill establishes what's known as the
quote: ``Pilot Program for National Redevelopment of
Brownfields.'' This will enable the HUD Secretary, and I would
hope that our representative from HUD here, Mr. Bernardi, will
help me understand this need here, will enable the HUD
Secretary to fund a common loan pool for brownfields and
economic development loans to be distributed on a competitive
basis. By that, I mean I don't fully understand the need for
its so-called pilot program, but you can tell me how that gets
integrated.
Because the newly passed Small Business Liability Relief
and Brownfields Revitalization Act authorizes only $200 million
with a $1 million cap on funds to any individual locality, the
pilot program funds, as I understand it, will fill the gap for
potential developers of the other hundreds of thousands of
brownfields across the country. Again, I just don't understand
that separation, but there must be a temporary need for this
proposal.
Significantly, the HUD 2003 proposed budget request
submitted to the President proposes decoupling the brownfield
programs from the Section 108 loan guarantee program to attract
more participants. This reflects, of course, what we are
proposing here in this legislation. And it's assuming, of
course, that we're going to be successful in getting this
through.
I certainly would like to take time again to commend
Congressman Miller and the Northeast/Midwest Coalition, of
which New Jersey is an active participant, for their work on
this issue. They have worked closely with HUD officials to look
for ways to make this program more efficient and effective so
that we can provide State and local governments another source
of funding for brownfield cleanup and redevelopment.
I also want to thank Congressman Jack Quinn of New York and
Marty Meehan of Massachusetts for their work on this important
issue.
And with that, I would like to acknowledge Congressman
Frank, the Ranking Minority Member on the subcommittee, and
look forward to his comments.
[The prepared statement of Hon. Marge Roukema can be found
on page 36 in the appendix.]
Mr. Frank. Thank you, Madam Chairwoman. I want to express
my appreciation to Mr. Miller and Mrs. Maloney who worked with
him in bringing this forward. This is a very important step. We
will be marking this up actually next week. We had a couple of
questions, but they do not go to the fundamental heart of the
bill, and I am confident that we will get a unanimous vote out
of the Committee I believe on this. Certainly on the basic
principle, there is no good reason--I can't even think of a bad
reason--why it should be Section 108 dependent requiring this
to be part of a loan program as well as a grant.
I note that the Administration has taken a position with
which I am in substantial agreement that we should, with regard
to the International Development Association, which helps very
poor countries, we want to switch from loans to grants, and if
we can do that overseas, which I think we should, I think I can
support doing it for a lot of American cities. So I want to
work on this.
I'm particularly pleased that we will be hearing later from
the Mayor of the City of New Bedford in the district that I'm
able to represent, because New Bedford is one of those American
cities which carried the burden of industrialization for this
country for a very long time, and then found national policy
somewhat neglectful of the needs of its citizens, including
leaving behind as the result of some of this industrial
activity, brownfields. Brownfields, I must say, is the nicest
word for a pretty nasty group of places that anybody has ever
coined. And helping the municipalities deal with the brownfield
situation is a very important one, so I am very supportive of
this.
I would note that the one set of questions we have deals in
part with the implications of ending the linkage with the
Community Development Block Grant Program. It's the wrong kind
of linkage to Section 108 and I raise that, Madam Chairwoman,
because I want to renew my request, which I've made several
times before, that we have a hearing on the whole question of
Community Development Block Grants and particularly on the low-
and moderate-income impact. That's very important to a number
of our colleagues. Congresswoman Meek from Florida and others,
and it's an issue that came up when we debated the
appropriations bill people will remember, and the question was
making certain firefighting activities eligible. So while I
want to go ahead with this hearing, I hope that this will be
the precursor to a hearing in which we consider the broader
implications of the CDBG program, although there's no reason to
hold up this bill as we go forward.
The only other point I would make is this. The purpose of
this bill is to give more Federal money to municipalities so
they can do something very good. That's important to note,
because we have this strange dichotomy in America in which
almost everybody in this House of Representatives is for, from
time to time, giving people more Federal money to do good
things, but in general we think the Federal Government
shouldn't have any money. People need to understand that there
is a disconnect. You cannot keep reducing the amount of revenue
the Federal Government takes in and expand the amount of
revenue the Federal Government gives out. And this is an
example of Government. People should understand this. This is
bureaucracy, this is Government. The people sitting at this
table are two public employees of great distinction who intend
to administer a program in which we take tax revenues and give
it to other public employees so that they can do good things.
In the abstract, this whole process of taxing the private
sector so that one group of public employees can give another
group of public employees money to do something is often
demonized. In particular, everybody's for it. And there really
is a limitation intellectually in the extent to which you can
be opposed to something in general and then be all in favor of
it in the particular. And I hope that this strong support for
the particular will ooze out a little bit, maybe leaching would
be the term in terms of brownfields. Maybe a little of this
support for this particular Government activity will leach over
the people's views about whether or not the Federal Government
is a bad thing, and whether or not having Federal revenue is a
bad thing.
The last the thing I have to say is a bit of an apology.
The House Judiciary Committee will be going into session at
10:30, fortunately not far away, to mark up a couple of
important pieces of legislation, and one of the consequences of
legislative scheduling is it has become fashionable for Members
to get elected to Congress and spend a great deal of time
expressing their horror at the very notion of association with
other Members of Congress. That is it has become a mark of your
being good at the job that you spend as little time in the
place where the job is carried on as is humanly possible. So we
have this situation where Congress now exists from 6:00 p.m. on
Tuesday to 6:00 p.m. on Thursday, and if it starts getting to
6:00 p.m. on Thursday, the Members get cranky and want to get
out early. And the result is that we have two days, two working
days so that too many things have to be crammed into too few
days and we do not have enough time to do them adequately. And
thus I will have to be at both the Judiciary Committee and here
and that will mean that I will not be here for this full
hearing. It's not the chair's fault. She was very gracious in
the scheduling, and I appreciate her accommodating us in that
regard. It's just that you can only, I guess limitations is the
theme of today's sermon. The more you limit the Government's
money, the less you can do with it, and the more you limit the
number of days Congress is in session, the fewer things people
can accomplish. And having said that and knowing that, at least
in the current situation, it will fall almost entirely on deaf
ears, I conclude my statement.
Chairwoman Roukema. Well, I do thank you for that
bipartisan approach to action here in the Congress. My
colleague, I appreciate your support for brownfields, but we
will not have a debate on the other subject that you've raised
as to how we spend our money, whether or not we need taxes, and
whether or not we need a 5-day week here in Congress.
Mr. Frank. No, I appreciate that. What are the consequences
of a 2-day week is you don't have any time for debates.
Chairwoman Roukema. I'm going to recognize now the Chairman
of the Full Committee, Mr. Oxley, who has honored us with his
presence today. It's indication of an intense interest on this
subject. Chairman Oxley.
Mr. Oxley. Thank you, Madam Chairman, and thank you for
your leadership on this issue, and I want to associate myself
with most of the remarks of the gentleman from Massachusetts.
I'll be in more detail later in my submission to the
subcommittee, but we appreciate his leadership on this as well.
Madam Chairman, it seems that brownfields keep following me
around. As some of you may know, in a prior congressional life,
I spent a lot of time trying to reform the Superfund program
for the clean up of toxic waste sites. As a matter of fact, it
was just across the hall. Superfund has a broad liability
system. People are interested in redeveloping a contaminated
site fear that without legal protection, they could be sued to
pay for part or all of an expensive cleanup even if they had
nothing to do with the original pollution.
And what we saw emerge was the brownfield phenomenon.
Developers would shy away from even slightly contaminated sites
like old factories and gas stations and build instead on
pristine greenfields in the country. Cities lost jobs and their
tax base. Rural communities complained about urban creep. This
hit industrial States like Ohio especially hard. There are
thousands of abandoned brownfields in Ohio that have the
potential to contribute to the economy. I recall holding a
field hearing at a brownfield site in Columbus several years
ago. The true test of how persuasive you are with your
congressional colleagues is if you can convince them to traipse
over a frozen waste site in Ohio in 20 degree weather on
Valentine's Day, which I somehow managed to do. A few Members
still haven't forgiven me for that exercise.
The threat of brownfield life became so great that people
were moved to action. States like Ohio and Pennsylvania
pioneered voluntary cleanup programs providing more legal
certainty and flexible cleanup standards. Thanks to the good
work of our friend, Paul Gillmor, we now have a Federal law
clarifying liability at brownfield sites.
Today, we turn our attention to the Department of Housing
and Urban Development, HUD's brownfields and community
development programs are going to become more important as more
brownfields projects get underway. These programs need to be
user friendly, especially for communities that are new to this
specialized area. I'm pleased to be a co-sponsor of H.R. 2941
introduced by the Vice Chairman of this subcommittee, Gary
Miller, who has shown great leadership and vision on this issue
and the tenacity that can only be attributed to a weight
lifter.
This legislation will authorize HUD's brownfields programs
for the first time. It will make more communities eligible for
grants, make it clear that brownfield redevelopment is a
community development block grant eligible activity and permit
HUD to set up a pilot revolving loan program to maximize the
impact of Federal dollars.
Ultimately, the vast majority of the funding for brownfield
projects must come from the private sector. This subcommittee
is working to assure the banks and insurance companies under
our jurisdiction that brownfields projects are good business
investments. We want to remove the stigma and turn these into
normal real estate deals that have a manageable environmental
component.
I want to welcome HUD Assistant Secretary Roy Bernardi, who
was the former mayor of Syracuse and is well versed in the
community development issues. The Northwest/Midwest Institute
co-chaired by our good friend Jack Quinn, from Buffalo, has
been a source of innovative thinking about brownfields and
helpful in developing H.R. 2941. Charlie Bartsch has always
been able to see the big picture and of course I'm especially
honored to greet the Mayor of Mansfield, Ohio, Lydia Reid.
Mayor Reid and I have worked on a variety of development
projects over the years for Mansfield. Mansfield has a vigorous
revitalization program that has won national awards. Mayor Reid
has a great story to tell on the second panel, and we look
forward to her testimony, and want to thank her for taking the
time to come out here and share her vision on this important
issue.
Brownfields redevelopment should unite Republicans and
Democrats, city mayors and farmers. Our subcommittee has a role
to play by highlighting and fine-tuning HUD's vital programs.
Having toiled in the vineyards on this, I am very happy to see
brownfield legislation finally bearing fruit in this Congress.
Madam Chairwoman, thank you again for your patience, and I
yield back the balance of my time.
[The prepared statement of Hon. Michael Oxley can be found
on page 38 in the appendix.]
Chairwoman Roukema. I thank the Chairman. May I observe
that I'm told that we may be shortly having a vote on the
floor, but in any case, with that in mind, let us move as
quickly as possible with the opening statements.
All right, Mrs. Maloney, you're not a Member of this
subcommittee, so let me go on to Mr. Miller first. Thank you in
consideration of the time restraints.
Mr. Miller. Thank you, Chairwoman. I'd like to begin by
thanking Chairwoman Roukema and Ranking Member Frank also for
calling this hearing on H.R. 2941, the Brownfields
Redevelopment Enhancement Act.
My mike is awful loud, isn't it? Excuse me.
I would also like to thank the hardworking people of the
staff of this subcommittee who worked so hard to improve the
bill, and Chairman Oxley, you've been very supportive on this
issue and I want to thank you personally for that.
My personal knowledge of brownfields is rooted in a few
different experiences. As a developer and builder for over 30
years in Southern California, I've seen the interest in
redeveloping brownfields grow and grow each year. This has been
a response to the rising land value and the shrinking
undeveloped available property that we have in our communities.
Moreover, because brownfields tend to be located in developed
areas, they are close to the infrastructure and potential
markets private developers are often seeking.
However, I'm also very familiar with the liability issues
associated with brownfields. Although many of these concerns
were addressed with the passage of H.R. 2869, this issue still
merits attention. Lenders should not be scared away due to
liability issues.
As the Mayor and Councilman of the City of Diamond Bar, I
learned about the critical issues of financing brownfields
developments as I watched several neighboring cities analyze
the feasibility of redeveloping local contaminated sites.
Today's hearing focuses on the critical issue of financing
and there is where the Department of Housing and Urban
Development has a constructive role to play. HUD's financing
comes in after the environmental issues have been addressed and
communities need some assistance to close the deal. About a
year ago, I began discussions with HUD to try to remedy some of
the problems I was familiar with in regards to brownfields,
specifically the ability of communities to obtain capital
needed to develop these sites. I was pleased to learn that
HUD's Section 108 Loan Grant program has been trying to address
this issue for over 25 years. But I believe that in its current
form, 108 Loan Guarantee programs for the Brownfield Economic
Development Initiative--or BEDI--grants, are not flexible
enough. This finding is echoed by Secretary Martinez' budget
which proposes delinking these two programs.
In addition to delinking the BEDI grants from the Section
108 Loan Guarantee program, H.R. 2941 authorizes, for the first
time, the BEDI program and creates a pilot program for the
national redevelopment of brownfields. Moreover, this bill
clarifies that CDBG funds can be used for brownfields
redevelopment and it's not an attempt to reduce or to restrict
CDBG funding in any way.
By making HUD's programs more flexible and thereby
accessible to more communities, brownfields redevelopment will
become a more attractive option for communities of all sizes.
Again, I'd like to thank Chairwoman Roukema for her support and
co-sponsorship on this, as well as Congresswoman Maloney. I'm
looking forward to hearing the views of today's panel and I
hope we'll basically be able to resolve some of the issues that
local agencies deal with, and I'm delighted to hear that Mr.
Frank is not grouchy today. I've never seen him that way
before. But thank you for calling this hearing, Madam
Chairwoman.
Chairwoman Roukema. All right, thank you.
Mr. Tiberi. No? All right.
Congresswoman Maloney.
Mrs. Maloney. Thank you very much, Chairwoman Roukema and
also Ranking Member Barney Frank. I want to certainly welcome
from the great State of New York, the Honorable Bernardi,
Assistant Secretary and compliment him on the fine work that he
did in Syracuse. I know you're very familiar with this program.
You've had some successes in Syracuse.
I also thank my colleague, Gary Miller from California, for
working so hard on this for a very long time. I want to
emphasize that this work has been shared by many Members in
Congress. It has been very much a bipartisan effort. On the
House side, Jack Quinn, Marty Meehan, James McGovern and John
McHugh have introduced H.R. 2064, which also addresses the
decoupling issue, and on the Senate side, Senators Levin and
Jeffords have introduced S.1078 with a similar objective. And
the support for this legislation is significant, because it is
needed and it is bipartisan. As the Chairwoman pointed out, we
have over 500,000 brownfield sites in our country, it is a drag
on our economic development, and Congress really needs to
support and seek creative approaches that match the large
number of needs with the financing to redevelop contaminated
sites.
Obviously, one of the most critical obstacles in cleaning
up brownfields is funding and the financial resources that are
needed for a large number of potential jobs. This bill
allocates $25 million, and also will allow working with the
$200 million revolving loan.
The BEDI initiative has been successfully funded since
1998, and I support the flexibility of funding and the
streamlining, which is in this legislation, which will make it
easier to access. At the same time, there are many existing
BEDI success stories and Assistant Secretary Bernardi can
certainly tell you about the success in Syracuse where New York
State received over $800,000 in BEDI funds and a $2.19 million
Section 108 loan guarantee that are being used, as we speak, at
the Crossroads project by the City of Syracuse to create 200
new jobs for low- and moderate-income workers. And as this
legislation moves forward, I hope we can meet the dual goals of
streamlining the funding and the approval process and making
these funds available quickly to the needy communities such as
the Syracuse project.
I welcome all efforts to review HUD brownfields activity
and all efforts to increase the number and effectiveness of
projects that the Department funds. I want to note that this is
for State and local entities, it is not for private developers
and our State and local entities desperately need this help.
Even the City of New York has a number of brownfields areas
that are just really fallow and sitting there not serving or
helping anyone. And with this program, hopefully we can build a
community center or a park or something that people can use.
I thank everyone for their efforts on it. I look forward to
working with the Minority staff and the Majority staff as we
move forward to a mark-up, and thank you very much,
particularly Congressman Gary Miller.
Chairwoman Roukema. I thank the Congresswoman. We are going
to be having a vote, as you can tell, or maybe you don't know.
Those lights mean that we're having a vote on the floor, so if
the panelists will excuse us, we'll go to vote on the floor and
I understand that more Members are expected to return right
after the vote, and we will begin immediately following this
vote.
Thank you.
[Recess.]
Chairwoman Roukema. The hearing will come to order. I
believe we will have to proceed. Oh, here, I was just going to
announce that Mr. Frank was in a mark-up of the Judiciary
Committee, and he's back here now, and I think with that, we
can proceed and hopefully we will have a period of time without
voting interruption to hear our panels today.
I do want to welcome the Honorable Roy Bernardi, Assistant
Secretary for Community Planning and Development at HUD. We
appreciate your being here today, and certainly you bring
extensive experience on this subject sa well as a whole range
of subjects relating to housing needs in this country. So Mr.
Bernardi, I welcome you and with that, I will hold it open for
your statement. I will also inform you that any statement can
be included in the record. By unanimous consent, your full
statement will be included in the record and anything
supplementary that you want to include, if you just mention it,
it will be included in the record. Thank you and the microphone
is yours.
STATEMENT OF HON. ROY A. BERNARDI, ASSISTANT SECRETARY FOR
COMMUNITY PLANNING AND DEVELOPMENT, U.S. DEPARTMENT OF HOUSING
AND URBAN DEVELOPMENT
Mr. Bernardi. Good morning, Chairwoman Roukema. I really
appreciate the opportunity be here with Ranking Member Frank
and the distinguished Members of the subcommittee.
My name is Roy Bernardi. I am the Assistant Secretary for
Community Planning and Development for the Department of
Housing and Urban Development, and I have the responsibility
for the management, the operation, and oversight of
approximately $8 billion in Federal funds, most of which are
distributed by formula to our communities for economic
development and housing activities.
As the former Mayor of Syracuse, New York, as Congresswoman
Maloney mentioned, I was a recipient at one time of HUD funding
and I can tell you all first hand that the programs are very,
very important to the communities around the Nation.
I'm pleased to appear before you to discuss a common
interest, brownfields remediation and revitalization.
Brownfields is a subject that has received a good deal of
attention these last few years. And President Bush indicated
clearly that brownfields revitalization is high on his domestic
agenda. Given the shared goals of the Congress and the
Administration, I think we have the makings of a good, solid
partnership. That potential was demonstrated only a few weeks
ago when President Bush signed the legislation that the
Congress crafted and that being the Small Business Liability
Relief and Brownfields Revitalization Act.
The redevelopment of brownfields may be framed in two ways.
One as an environmental cleanup issue and two as a community
redevelopment issue. Framed as an environmental issue, the
central concerns are an assessment, the cleanup, and potential
liability and the principal players are environmental
specialists and engineers. Framed as a community development
issue, the central concern is the issue of creating a community
asset and the principal players are economic development
specialists and financiers.
Experience has taught us that both approaches are relevant,
especially when they are harnessed together. For a variety of
reasons, coordinating remediation and redevelopment into an
integrated approach does not always happen seamlessly. At the
Federal level, HUD, the Environmental Protection Agency, the
EPA, and the Economic Development Administration, the EDA, are
the primary agencies that assist communities with addressing
brownfields issues. Given the different funding mechanisms that
exist within these agencies, their various regulatory
responsibilities, their own internal priorities, their unique
field structures, and certainly the well-established operating
cultures within each agency, the coordination of HUD with EPA
and with EDA is not always an easy task.
As we move from the Federal to the State and local levels,
the complexity of this obviously sometimes only increases. All
over America today, big cities, small cities and medium cities
are engaged in building cities on old industrial and
manufacturing sites that were left soiled by our heavy
industries of the early and mid-20th century. The General
Accounting Office has estimated that 450,000 brownfields sites
exist, the vast majority of which are located in urban areas.
We at HUD, along with our colleagues from EPA and EDA and
the other 20-plus Federal agencies involved in the interagency
brownfields efforts, strive daily to achieve the maximum result
at the minimum cost and in the shortest time.
Secretary Martinez and I are committed that HUD will
fulfill its mission as the principal vehicle for the
redevelopment of these brownfields.
Let me turn to H.R. 4921, the Brownfields Redevelopment
Act. As we understand it, the purposes of this Act are to:
first, provide more flexibility to communities; second,
increase accessibility to funds; third, increase capacity to
coordinate and collaborate. It does this by providing
additional incentives for remediation and redevelopment and by
delinking the Brownfield Economic Development Initiative grants
from the Community Development Loan Guarantee program. Further,
this bill clarifies that activities associated with brownfields
redevelopment are eligible activities under the Community
Development Block Grant program. Finally, it permits the
Secretary to establish a pilot program, a common loan pool
which may be securitized.
We are interested in working with you on this, and other
approaches to brownfield revitalization, that will enhance the
well being of affected communities.
A survey of over 200 cities by the U.S. Conference of
Mayors estimated that brownfield redevelopment could add up to
$2.7 billion in additional tax revenues and create 675,000 new
jobs if these sites were returned to productive use. We, as an
Administration, are committed to what I am calling the Three R
approach; remediation plus redevelopment equals revitalization.
Just as Governor Whitman has brought a new level of
commitment to EPA, to address and resolve brownfield
remediation, Secretary Martinez and I bring a renewed
commitment to HUD's focus on redevelopment. Brownfields include
real property with real or perceived contamination. Therefore
significant remediation is not always necessary or required. As
always, HUD's role as the catalyst and contributor is to
leverage adequate private financial resources along with other
public funds to enable redevelopment to take place. We are
confident that our brownfields effort will, over the long term,
provide for neighborhoods to attract better housing, and will
lead to better quality living environments for moderate and low
income residents.
I'd like to tell you just a little bit about my experience
as Mayor of the City of Syracuse. Back in 1989, we had a scrap
yard on the northern section of our city. And that scrap yard
was 75 acres. That was remediated and now what sits there is a
1.5 million square foot shopping mall called the Carrousel
Center accomplished by the Pyramid Company.
Presently, just before I left in July to assume this
position as Assistant Secretary for CPD at HUD, we were able to
negotiate with this developer to reclaim the 60 acres that are
adjacent to that site. And on those 60 acres were approximately
75 oil tanks. It was known as ``oil city.'' If you fly around
this country, as I know most of you do, as you go into an
airport, usually you'll see the oil tanks right in the
periphery of the city. Well, through eminent domain and through
negotiation, these oil tanks were moved. That site was
remediated and right now the plan is to construct another 3.5
million square feet and call it Destiny USA, not just a
shopping mall. And I bring this up because the first phase of
that created thousands and thousands of jobs, permanent jobs,
temporary construction jobs, tremendous sales tax income, and
it really revitalized that area.
And the tens of thousands of jobs, the property taxes that
eventually are going to accrue from that project is going to
enhance the City of Syracuse and the County of Onondaga. But it
was a partnership. It was a partnership of the Federal
Government, the State government. Syracuse is now an
empowerment zone using tax incentives. That developer, you
provide a business person with the opportunities to make money
and make sure that that bottom line is going to obviously do
what it needs to do for a business person to be successful, you
can create the kind of atmosphere, the kind of remediation off
those brownfield sites, the redevelopment of those brownfield
sites so that everyone benefits, and the purpose here is to
preserve the environment, take care of the environment, create
economic activity, create jobs. And we at HUD play a small part
in that, and the Bush Administration understands that there are
opportunities to improve the revitalization process, to speed
redevelopment while still achieving remediation of risks to
human health and the environment. We can improve the
administration of our brownfield efforts without sacrificing
either redevelopment or remediation. We really, really believe
that and the cooperation between EPA and HUD in the short 6 or
7 months that I've been there is improving, and I feel very
good about that. So Madam Chairwoman and Members of the
subcommittee, we thank you for your leadership and as we look
at this bill, and Congressman Miller, thank you for all of your
efforts in putting this together. Congressman Frank, you talked
about limitations. Well, we want to take those limitations
away. We want more people to have access to the limited amount
of funding that we have for brownfields. Thank you.
[The prepared statement of Hon. Roy A. Bernardi can be
found on page 49 in the appendix.]
Chairwoman Roukema. I thank you, Secretary Bernardi. Let
me, and I do commend you for outlining very nicely the positive
and the comprehensive approach that is being take here. It's
not only the environment, it's jobs and housing, and I think
you made an excellent case.
But I do have to go back to the question I introduced in my
opening statement, and you referenced the Pilot Program for
National Redevelopment of Brownfields. Why does that have to be
supplementary? Cannot that be integrated? I don't really
understand the reason for the separation and why it's not the
common pool, or is it a common pool?
Mr. Bernardi. Well, the pilot program for the
redevelopment, as I understand it, it's a common loan pool for
economic development and it's going to be geared toward a
common underwriting approach. It's going to serve as a credit
enhancement for private loans.
Chairwoman Roukema. Why should that be separated, however,
from the overall BEDI program, the Relief from Brownfields
Revitalization Act? I don't quite understand the reason for the
separation.
Mr. Bernardi. Well, we're planning to separate the 108 from
the BEDI obviously to have communities that can't participate
in the process, non-entitlement communities, for example, that
receive their CDBG dollars from the State. We want more
participation, but at the same time this is a pilot program
that I believe our staff is working in conjunction with your
staffs to try to put it together so that we an create another
avenue for communities to be able to participate in brownfield
remediation.
Chairwoman Roukema. Well, I'm going to have to submit a
question in writing to you for more explicit explanation of
this, and I don't believe it's going to be contradictory to the
total--it won't be contradictory to the total bill and we will
be able to deal with it, but I just don't understand the
technicality.
Mr. Miller. Madam Chairwoman.
Chairwoman Roukema. I yield to the Congressman.
Mr. Miller. The difference is currently in order to get a
BEDI grant, you have to apply for the loan and it's guaranteed
through CDBG fund repayment, which virtually blocks the use of
CDBG funds locally. This takes and sets up a new pool and says
you can apply for a BEDI grant without even getting a loan, and
it doesn't impact your CDBG funds, or if you want to get the
loan through the guarantee program and the CDBG fund, there's
no locking in the CDBG funds for the guarantee so you can
virtually go get a loan for the redevelopment of a brownfield
site plus a grant, and yet have your CDBG funds be used for
purposes in the community that they're currently used for.
Chairwoman Roukema. I guess what confuses me is the
terminology ``pilot program.''
Mr. Miller. Because it's a limited program. And the $25
million can be used----
Chairwoman Roukema. By time? By time?
Mr. Miller. Well, no. It can be increased next year by
appropriations if they want to. The bill allows each year they
can increase the program if they want to, but this year it
starts up with the $25 million and that's leveraged funds which
could equate $100 million worth of loans or $200 million worth
of loans.
Chairwoman Roukema. We won't take up more time on this, but
I guess my definition of pilot program is different from what
is being defined in this bill. But it's not going to be
contradictory to our mutual goals here.
Mr. Bernardi. As Congressman Miller indicated, there are
communities that were just averse to pledging their CDBG
dollars to be involved in the BEDI program, so we wanted to
take that away by delinking it with 108. Now the pilot program
for the common loan pool is not a substitute for that, but I
think it gives additional impetus, it gives additional
opportunities for communities, but I'll be more than happy to
have our people look at it and get back to you in detail.
Chairwoman Roukema. I would appreciate that. Thank you very
much.
Mrs. Jones. Thank you. First of all, good morning. Glad to
have you here before the subcommittee. I hail from the City of
Cleveland where there are a lot of issues with regard to
brownfields. We have, in fact, right now a juvenile justice
center being built on an old facility that was like a Carling's
Brewery facility and the possibility of a job corps facility
being built on an old facility that used to be a Ford Motor
Company place. So the issue of brownfields is prevalent,
particularly in cities like the City of Cleveland and other
industrial areas where we still have a number of former urban
filling stations, as they used to call them. They now call them
gas stations. I'm laughing, because the other day I was walking
with my dad, who's 80 years old, and he said ``filling
station.'' I said to myself, ``Boy, I haven't heard that term
in a long time.''
So there are a lot of places and I am very much supportive
of options or opportunities for communities to use dollars for
brownfields in innovative ways, particularly as we begin to
talk about housing. My question would be directed to assuring,
and this is the issue that continues to come up in my
community, why are we building juvenile detention facilities?
Why are we building job corps facilities on locations that were
brownfields? What do you believe that we can do to assure the
communities across the board that the locations that we clean
up are going to be redeveloped for other purposes and are going
to be cleaned up for other purposes. Surely clean to the extent
that children would not be put in jeopardy, people moving into
housing would not be put in jeopardy. How do we get that
message out to them?
Mr. Bernardi. In the BEDI application, the Brownfield
Economic Development Initiative Application, there is a grading
system to make sure that the environmental work is done so that
we don't have a property, once the money has been expended,
that will cause harm to children. It can be residential, it can
be a playground, it can be obviously the community puts forth
in the application what they want to use the property for once
the remediation takes place. But in the application process,
there's a scoring system. That scoring system indicates that we
need to be assured that the remediation will take place so it
won't have a harmful effect on its reuse.
Mrs. Jones. What else do I want to ask? I'm usually not
speechless. The question just came to me so quickly, I think it
was going to ride on top of some other questions. One of the
suggestions--I also serve on the Small Business Committee,
Subcommittee On Empowerment--a suggestion that the Small
Business administrator and HUD administrator begin to have a
discussion about what can we do collectively to continue to
build communities by encouraging small business and encouraging
housing to happen in the same development. Do you have any
ideas in your capacity that you serve whether we might be able
to do that? Because in my opinion, a community is more than a
house or housing. A community is having the ability to have
businesses operating right there with that housing.
Mr. Bernardi. As I indicated earlier, I was Mayor of
Syracuse, New York and like most northeastern cities and other
cities around the country in the 1960s and 1970s and 1980s,
everyone pushed out into the suburbs and left the city behind
with a significant number of brownfields sites and
neighborhoods that were in blight. My belief and Secretary
Martinez I know feels very strongly about this, is we need to
have more people owning their own homes. Right now, there's
67.7 percentage of homeowners overall in this country. When we
look at minorities, we look at African Americans, I believe
it's about 49 percent. We look at Hispanics, it's about 48
percent. And home ownership in the center cities is only 52
percent. Initiatives such as this, the Brownfield Economic
Development Initiative, our HOME program, our CDBG program,
what we strive to do is not only to build housing, to refurbish
housing to provide rental assistance, but at the same time the
UD, Urban Development, has to take place.
To me, it's a very simple process. You need economic
development--you need jobs so that people can buy homes, people
can live in a neighborhood, people can have a good quality of
life and send their children to school, so it's a combined
effort.
What I think we're doing with EPA right now, the
opportunity to work together where they will do the
remediation, we will do the redevelopment. I'm very pleased, as
I know all of you are, that the budget at EPA has been doubled
to $200 million, up to a maximum of $250 million. This is the
first time I believe that EPA is actually doing direct grants
for remediation. There's an awful lot of unused property in a
lot of our neighborhoods in our central cities that programs,
such as this, are going to help. Not just for businesses,
that's the primary part of it, obviously. We want to redevelop
and we want to create jobs, but at the same time on the
periphery of those businesses, we need to continue parallel
roads to build our neighborhoods so people who are in those
neighborhoods can work in those businesses.
Mrs. Jones. My time is up. I can't ask any more questions,
but I look forward to having the opportunity to work with you
and your administration on this issue, particularly in the City
of Cleveland. Thank you, Madam Chairwoman.
Mr. Bernardi. My pleasure.
Chairwoman Roukema. I thank you.
And now, Congressman Miller.
Mr. Miller. Thank you, Madam Chairwoman.
It's good to have you here today. When I started meeting
with the Secretary the first part of last year, right after he
was sworn in, we had an agreement on the issue of redevelopment
and housing issues and specifically brownfields and looking for
opportunities to be able to provide local assistance. I know a
lot of local cities have a lot of political pressure placed on
them, especially when it comes to CDBG funds, because there are
so many groups pulling at them for those dollars.
So under the current program, for them to go out and really
use funds for redevelopment purposes, many cities were unable
to do that because of the obligation of historically giving
those funds to certain groups within the community. That's
where I became interested in this legislation. We looked for
areas and we thought how can we take and provide opportunities
to revitalize communities, eliminate brownfields and put them
to purposes, whether they be parks or community centers or
commercial use or residential use, and yet free up the
opportunity for cities that still have CDBG funds to use with
those local groups that they've historically dealt with. I
think this bill does a good job at that.
The Chairwoman had a concern because of the term ``pilot
program'' and I understand that. But the way the bill is
drafted, it says $25 million this year, but the appropriators
can, if it's a successful program, can increase that to $50
million or $100 million or $200 million if they want to as the
years progress. So it's a program that I believe will justify
itself, and if it does justify that it's benefited the
communities, which I believe it will, then the appropriators
have the opportunity to increase the program and help HUD in
working with that. And the site of a loan guarantee being able
to receive a BEDI grant, if you can do that now before these
projects based on this bill, without having to borrow money,
which you couldn't do before, plus if you want to go out and
get a loan, and then get a BEDI grant. At the same time, these
funds can be used to leverage, if the Secretary chooses, $12.5
million. That might leverage $100 million worth of loans or
$200 million, depending on the amount they're able to leverage.
This is a program that, although it's considered a pilot
program, I think can be a very beneficial program nationally
and can really produce great benefit, and I applaud you for
being here today. I have no questions. I've worked with the
Secretary and your staff. You have just been excellent trying
to resolve the issues and resolve the concerns. I've worked
with the Democrat staff also to try to deal with some of the
issues. A big concern that the staff on the Democrat side has
with the way CDBG funds are being locked up. That's why we made
sure, through the bill, that it said no, this is really going
to enhance current programs. If you want to go get a loan under
the current program, you still can using 108 funds, and then a
loan under BEDI, a grant under BEDI, or you can take and go
this direction, or you can get a loan guarantee, you can get a
BEDI grant and yet not involve your CDBG funds in any way. So I
want to thank you for working with us, working with my staff
and the Ranking Member's staff here and the Chairwoman's staff.
They've been just excellent. I applaud you for your efforts in
this area.
Mr. Bernardi. Thank you, Congressman. I know of what you
speak when you talk about the CDBG grants. In many communities,
before they get there, they're already spent. And the groups
that vie for that money it becomes very difficult, but there's
also the old adage that success breeds more success. If we go
with this program, and we've enjoyed working with your staff
putting it together, CDBG dollars can be used for brownfield
redevelopment. Some communities do it obviously more so than
others. As I mentioned earlier, we do this redevelopment. We
give businesses the opportunity to expand or to locate into an
area where all the infrastructure is already there and has been
there for years. We create jobs, then they're creating jobs for
the people that need them the most.
Mr. Miller. Your goal has tried to create accessibility and
create an environment where there can be more funds in the
market to solve this problem and I believe this bill goes a
long way to doing that. Thank you for your help.
Chairwoman Roukema. Thank you.
Now I want to recognize Congresswoman Maloney and
acknowledge the fact that she is an original co-sponsor of this
bill. I thank her for her leadership.
Mrs. Maloney. Thank you, Madam Chairperson.
Do you have a listing now at HUD of brownfields sites. In
the past, there's always been a reluctance in New York to
designate anything brownfields, because of the problems or
challenges that come out of that. Do you have a listing now?
Mr. Bernardi. EPA would have a listing. I'm sure we have an
identification of them, but they have a listing that I think
would be more exact.
Mrs. Maloney. What is the criteria for brownfields?
Mr. Bernardi. Real or perceived contamination. That's a
good phrase, real or perceived. Perceived sometimes is you look
at a property and perhaps it's unkempt and it just looks bad
and you feel there's contamination there, but I think as you go
through the phases, Phase I tells you whether there's
contamination, and then that requires a Phase II.
Mrs. Maloney. Today we will hear testimony on the second
panel about how the delinking of the Section 108 guarantee and
the BEDI funds will allow more access. It certainly is my
desire to get as much money as quickly as possible to the
communities that need it. The bill also states that the
Secretary shall establish criteria for awarding grants. Could
you share with us what those criteria will be?
Mr. Bernardi. Well, I think we have it here chapter and
verse.
Mrs. Maloney. Will this be done by a panel or just by the
Secretary? I would assume you're going to have many more
requests for the $25 million in the pilot program than the
funding will be available.
Mr. Bernardi. As I mentioned earlier, the application
process is competitive, and there's points for different
categories and it's quite detailed. There's a program overview,
eligible activities, national objectives.
Mrs. Roukema. Will the gentlelady yield? That's an
excellent question, and I'd just like to refer back to the fact
that the record is open and I think this is the kind of
information that HUD, that you, Mr. Secretary, should be
submitting in writing for the record, because it's an excellent
question.
Mrs. Maloney. I just know that the prior criteria was need
soundness of approach leverage capacity of the administering
organization and cooperation of the proposed project with
community development objectives.
I wonder if the criteria is going to change or will it be
the same criteria.
Mr. Bernardi. Not appreciably. The Secretary will make the
final decision, but I'll get everything back to you in this
booklet that tells you what the procedure is now and any
perceived changes.
Mrs. Maloney. In addition to the legislation we're
considering today, what other proposals is the Bush
Administration considering that would increase available
funding, actual money, to clean up brownfields through HUD?
Mr. Bernardi. Our budget for 2003 is $25 million for the
Brownfield Economic Development Initiative.
Mrs. Maloney. But it will also be able to tap into the
Gilmore initiative of the $250 million in loans, is that
correct?
Mr. Bernardi. That's EPA, as I understand it.
Mrs. Maloney. But this could work with that program and
leverage more money for this initiative?
Mr. Bernardi. Absolutely.
Mrs. Maloney. That's very good. Do you see any problem in
the de-linking?
Mr. Bernardi. Not at all. It would still allow a community
the opportunity to use a 108 if they so choose, but by
delinking it, it's going to give other communities, smaller
communities if you will, the opportunity to participate in the
competition.
Mrs. Maloney. Syracuse is a small community and you got
through the de-linking. Why is it such a problem to be linked
with a Section 108?
Mr. Bernardi. There are smaller communities in New York
State, for example, Congresswoman, that the State basically
they're not entitlement communities so they have to depend on
the State to pledge their CDBG dollars, and in some instances,
many instances, the State doesn't want to do that for the
community, so it gives the community a little more independence
and flexibility, smaller communities. In Syracuse, we use the
108s.
Mrs. Maloney. Then it will release the CDBG, because then
you don't have to use the CDBG?
Mr. Bernardi. That's right.
Mrs. Maloney. That also is a benefit. Well, I find it
exciting. I think it's an important program and I'm glad you're
in the position you are bringing the experience that you bring
from Syracuse successfully implementing prior programs in this
area. Thank you very much.
Mr. Bernardi. Thank you.
Chairwoman Roukema. Thank you.
Congresswoman Kelly.
Mrs. Kelly. Thank you, Madam Chairwoman.
We welcome you, and we're delighted to have you here. Mr.
Bernardi, I am just very excited about what you did in
Syracuse. I've seen it. It works. And the beautiful thing is it
puts back onto the tax rolls and thereby relieves the taxes, a
certain tax burden from the local citizens. When you do the
kind of thing that you do in Syracuse with brownfields, you've
moved them from useless areas of the community into something
that's very useful. People enjoy going there.
A similar thing actually happened in my home town of
Katonah, New York. We had oil tanks in the middle of the town.
It became a brownfield and we moved the oil tank. I was very
interested in your saying you moved oil tanks and redeveloped
the area into a shopping mall. In this little village of
Katonah, New York, we had oil tanks and we now have a three
story attractive group of small businesses in there that range
everywhere from a toy store to a podiatrist. All of those
people are bringing individuals into our community. It's really
an excellent idea. I'm a co-sponsor of the bill, and I really
do feel very strongly that we need to make progress. I'm
delighted that we have, if we can get a piece of it out for a
demonstration project, I think it's really important.
I do think though you've pointed something very important
out. That is that you've got to have State and local as well as
the Federal Government working together to make anything
happen. I'm very excited about the possibility also that we're
actually going to put money into the communities instead of
into one more study of something. It's wonderful to think that
there will actually be money put into an applied process that
will actually bring communities back in the same way that
happened in the community that you represented and my home
town.
So I welcome you here. I thank you for your testimony.
Thank you, Madam Chairman. I turn back the balance of my time.
Mr. Bernardi. Thank you.
Chairwoman Roukema. Thank you.
Mr. Bernardi, is there anything you would like to say in
summary? I believe we've concluded the questioning and are
ready for the second panel, but I don't want to cut you off if
there's some follow-up that you would like?
Mr. Bernardi. Just to say that it's a pleasure to be here
representing the Bush Administration and Secretary Martinez. Be
assured that we at HUD, all of us, working together with all of
your staffs, whatever builds up that we forge, we'll do it
together we'll do it in a combined way, and I welcome the
opportunity and I know the other speakers are going to provide
information and thoughts and ideas that we'll perhaps
incorporate into the process, so the process, as I understand
it, is to come out with the best possible bill that will enable
us to do what we need to do to help the poor people in our
country. I thank you.
Chairwoman Roukema. And I might repeat the inference or the
reference that I had in my opening statement that the Members,
yourself as well as Members, will have 30 days in which to
submit written questions. You will have that time period in
which to submit further information that we've requested and/or
anything additionally that you think is appropriate for the
record, and it will be an open record for the next 30 days.
Thank you again. Will the next panel take their positions at
the table.
I welcome all of you panelists here today. I will
acknowledge you by name as you testify, but I would like to
make the observation that all of you have extensive experience
in the field. You're not speaking hypothetically, you're
speaking from ground zero, so to speak. We do appreciate having
the benefit of your experience and long history of experience
at many different levels, both the local, State and regional,
as well as the national level.
That having been said, I recognize first the Honorable
Lydia Reid, Mayor of Mansfield, Ohio. And as we've all heard
that region has extensive experience in this area. We thank you
for your leadership and your presence here today. Mayor Reid. I
would simply ask you in the interest of time that you try to
limit your statements to 5 minutes. I'll use some discretion
here, but be aware of the time limitations. Thank you.
STATEMENT OF HON. LYDIA J. REID, MAYOR, MANSFIELD, OHIO
Ms. Reid. Thank you, Congresswoman. Again I appreciate the
opportunity to talk about House Bill 2941. I also appreciate
Congressman Miller's initiating the bill. It is long awaited
and we very much appreciate it. I'd also like to say hello to
my friend, Stephanie Tubbs Jones from Cleveland. Nice to see
you.
Mansfield, Ohio is the 19th largest city in the State of
Ohio. We're the county seat. We have a population of 50,793
people. We've gone through struggling times. We have a labor
surplus area with a poverty rate of 17.8. Our unemployment rate
is 9 percent. Our median household income is $22,591; 48.2
percent of our population is low-to-moderate income.
Over the years, as any typical Rust Belt city, we have lost
a lot of industry. As they closed up, a third generation did
not continue on in the process that their parents had
initiated. Our downtown was deteriorating. In 1989, we all
pulled together. Our downtown was absolutely gutted. We took
everybody, and this was Government, it was community, and
private developers, and as a result, we have a showcase
downtown called the Carousel District. We have the first hand-
carved carousel in the United States since the 1930s. We now
have over a million visitors a year, and we won the National
Mainstreet Award last year. That's just a little history of how
we have been able to do some things with our downtown area to
further emphasize the brownfields, which is what we're here
about today.
The City of Mansfield recently was awarded a grant for a
pilot project for a brownfield redevelopment master plan called
the PR Project Path Revitalization, and the key components of
that are identification of potential brownfield sites,
assessment of brownfield sites, remediation of brownfield
sites, redevelopment and prevention.
The City's PR project is a mixed redevelopment linear zone
with new commercial and industrial properties. The city also
includes large, under-utilized vacant parcels of land where
economic development is low or absent.
In this corridor, there's numerous abandoned and obsolete
buildings of all sizes and shapes that are just sitting there
waiting for the City to come and try to do something with them.
They no longer meet the operating efficiencies demanded by
modern manufacturing processes. The numerous brownfield sites
have depressed our inner city core. The property values are
going down. Community values in those adjoining neighborhoods
are down. Depressed real estate values, people don't want to
invest where everything does not look like it will ever rise
again.
What we did, we initiated a multifaceted undertaking. We
said, OK, we've got this site. We communicated with local and
State regulatory agencies that were our public partners. We
continued dialogue with them to establish a foundation for the
Brownfield Initiative. Then we went to the industrial
facilities. We said we would secure the services of the
contractor, which we have been using McCabe Engineering as our
consultant who has been excellent that had worked the
industrial arena, because you need consultants that know what
they're doing when you go into these projects.
The private partner offered first hand knowledge of the
working complications, then the current and past owners were
contacted and we said to them, you have to be a part of this,
this was your doing, it was on your watch that this occurred.
You will have to come very apprehensively into the process to
contribute dollars to help us put this plan together. Obviously
we were faced with how are we going to fund the entire issue
once we had an estimate of what the cost was. And subsequently
we secured required funds. We did not go to 108 dollars for a
very good reason. We didn't want to tie up our precious CDBG
dollars into 108 commitments, because as all of you well know,
when you borrow 108 dollars, you've got to take that chunk out
of your CDBG money and say we pledge this and then if we
develop the site and we don't get our money back in the
timeframe that we have to pay the 108 back, we are then stuck
with taking that out, the precious dollars that we used to
revitalize homes, to provide housing for the elderly, for
demolition, for all the other things you do with CDBG money.
So what we did, the first big project we did, we got a
pilot grant of $200,000, we got a revolving cleanup, revolving
loan fund of $1 million, which is a grant from the U.S. EPA. We
went to the Ohio Department of Development Urban and Rural
Initiatives, and we got another grant, $750,000, and then we
went to the potential responsible parties and got another
$570,000. So that project was $2,820,000. We were able to do
this without getting into our 108 dollars because we found
other ways, with the help of the State, and our consultant and
the EPA in order to do those things.
Now the challenges are obvious and I'd like to bring up a
little bit about----
Chairwoman Roukema. Mayor Reid, can you summarize. I'm
going to extend your time period, but your time is up.
Ms. Reid. Let me just conclude, Congresswoman. The city is
fortunate to have had success with our brownfields program. In
an effort to spur development, the city has taken ownership of
the brownfield sites, became the banker, secured the funds,
secured the loans to assess and remediate the sites. Our
brownfields cost $50,000 to $100,000 an acre, but greenfields
are $10,000 to $20,000, so in summary, we need to be able to
have more accessibility to funds that are like Section 108
dollars that we don't have to worry about whether or not we're
going to pay back, because the city doesn't have enough money
to do it all.
In summary, we totally support the bill and look forward to
its passage. Thank you, Congresswoman.
[The prepared statement of Hon. Lydia J. Reid can be found
on page 68 in the appendix.]
Chairwoman Roukema. Mayor, may I just ask one tiny
question? It may not be so tiny. But when you made those
decisions, were you and the counsel free to make those
decisions at your own pace? You weren't limited either by State
or Federal legislation? You had that latitude?
Ms. Reid. We did have the latitude. We took the initiative.
We looked at our Ohio Brass site, for example, which was really
the critical one, coming right into town, terrible looking
sight, and we took the initiative to go out to the people that
owned the buildings before. We took the initiative. It was our
decision. EPA was not hammering us over the head, if you will.
Chairwoman Roukema. And your local zoning ordinances or
State were not restrictive?
Ms. Reid. They were not. We worked very closely with all of
them.
Chairwoman Roukema. Thank you.
The second panelist is the Honorable Mayor of New Bedford,
Massachusetts, Frederick M. Kalisz. Mayor Kalisz from New
Bedford, Massachusetts.
STATEMENT OF HON. FREDERICK M. KALISZ, JR., MAYOR, NEW BEDFORD,
MASSACHUSETTS
Mr. Kalisz. Thank you very much, Madam Chairperson. We
certainly appreciate the opportunity to address you and the
Members of the subcommittee today.
New Bedford is a city of 95,000 people. We are also this
year recognized as a brownfields showcase community among the
Federal agencies of the United States Government. The
brownfields program has spearheaded an economic development
program that it has proved that it can provide jobs and
business opportunities. Today I hope to provide in this brief
period a perspective of local government to you in your
deliberations process.
My purpose is twofold to describe some of the extensive
experiences and successes as well as second to comment
specifically on H.R. 2941 and how we might benefit in the
future municipalities, such as mine.
As mayor, I took over just a little over 4 years ago. We
had realized a job loss in our community of some 11,000 jobs,
mostly from the industrial and manufacturing complex that
Congressman Frank had made reference to a little bit earlier.
Unemployment was high, real estate values were dropping, and
tax revenues were in a free fall. We reversed that trend to a
degree. Our unemployment rate went from 15.6 percent down to a
low of 5.3. Assessed valuations have begun to rise in the
community, and the fishing industry, which has been a mainstay
of our economy is once again beginning to thrive.
The Port of New Bedford is the largest-value port of
fishing anywhere in the United States. Last year, 3,600 jobs
were maintained and over $700 million in seafood-related sales
were earned. We've created a tourism industry at the same time,
and this year some 30 cruise ships will arrive in the port that
Melville once referred to in Moby Dick as the ``most fairest
place of all of New England.''
We have a national whaling museum, a national park and
we're developing a marine science center that will truly
enhance and recognize the God-given resources that we have.
Our many environmental challenges over the decades have
spawned new environmental management opportunities and
management industries. The brownfields program has been a major
help in reversing our economic decline and beginning our
economic and cultural revitalization. Our job training program,
funded by one of the early brownfields programs, has allowed
individuals not only to learn new job trades in hazardous waste
management, but has provided them with meaningful compensation
opportunities, enhanced benefits, and in many cases the
opportunity to continue their formal education past the post-
secondary level.
The brownfields pilot program funded a comprehensive
evaluation program of all of our brownfields sites, permitting
us to evaluate and formulate a plan for the future. Our
targeted site assessment allowed us to take funds and put them
into a waterfront development over land that had earlier been
made reference to by the Secretary, was unappealing and deemed
to be a brownfield just because of the lack of understanding of
what could possibly happen.
As I made reference to earlier, we've been named recently a
Brownfield Showcase Community. That allows for Federal
representation in our community to manage potentially dozens of
projects within the City of New Bedford and allow for the
coordinations of agencies' efforts to ensure that a fast
tracking takes place, and the re-utilization and use of
properties to become economically viable. We need the
brownfields program. We are identifying and remediating
hazardous situations, removing the cloud of concern and
liability which has been inhibiting new development for
decades.
I enthusiastically support H.R. 2941. We believe that the
BEDI grants at the same time should be decoupled from the
Section 108s. I'd like to explain a little bit about that with
regard to the funding situation. New Bedford's experience has
demonstrated that small public investment in cleaning up and
redeveloping abandoned and under used properties yield large
returns of tax revenues and employment. The brownfields
programs spell hope to communities such as ours. I respectfully
suggest to you that you not diminish the BEDI program by
deducting the BEDI funds from the Community Development Block
Grant program. And I'd specifically like to talk about the
flexibility of what is so important and I understand my time is
drawing to an end.
We have been able to take a program, such as an oceanarium
in the City of New Bedford, a $100 million investment, and the
city has taken the lead. We've been able to get a $2 million
BEDI on top of a $3 million section 108 which has then
stimulated State, local and private investment to the tune of
some $80 million. The shovel will be going in the ground this
year, this July, to what will be an extensive project. That's
where it works when it's coupled together. But where there are
non-revenue generating projects, such as the reenhancement of
parks in urban mill settings where housing has been the
predominant mainstay of what has been left, the mills have been
taken away. You don't have the revenue generating capacity.
Park development that could benefit from a BEDI grant will then
stimulate the private sector to look at an environment that has
been enhanced, and allow for them economic development at that
point.
My final comment has to do, just very simply, with the fact
that there are other programs in ports such as ours with
homeland security issues and other issues that cannot generate
revenue of and by themselves. But the value of the BEDI a
brownfield economic initiative program can help to stimulate
that type of economy. The loan programs that were spoken of by
HUD I believe as well are a good move into the future. HUD has
demonstrated themselves in a good loan management program with
municipalities. EPA has done a wonderful job with grant
administration. HUD has been the expert with the loan programs.
And it rightfully belongs with an agency that has a track
record of these types of successes.
I thank you for the opportunity to have been able to
address you and look to you for support for the future sa this
legislation advances.
[The prepared statement of Hon. Frederick M. Kalisz Jr. can
be found on page 55 in the appendix.]
Chairwoman Roukema. Thank you very much. You brought your
practical experience to the fore here.
Mr. Bartsch, Director of Brownfield Financing Studies, the
Northeast-Midwest Institute. You're speaking for a large
component of those of us intensely interested in this subject.
STATEMENT OF CHARLES BARTSCH, DIRECTOR OF BROWNFIELD FINANCING
STUDIES, NORTHEAST-MIDWEST INSTITUTE
Madam Chairwoman and Members of the Housing and Community
Opportunity Subcommittee, I appreciate the opportunity to
testify today on this proposal. It reflects the next wave of
congressional interest and activity in the brownfields arena.
Since 1991, the Institute has analyzed activities in nearly 100
jurisdictions of all sizes across the country, and as you
pointed out, we work very closely with the bipartisan
Northeast-Midwest Congressional Coalition to examine the
relationship between environmental contamination and economic
development. A key part of that effort has been identifying
ways in which existing Federal financing programs could be more
creatively and usefully linked with the resource needs of
brownfield sites.
There's a clear and critical role for agencies such as HUD
to play to take the next step to help fill the brownfields
capital gap and improve the market conditions for these
properties. The BEDI program was put in place to respond to
this redevelopment challenge, and H.R. 2941 would make
important changes to enhance this effort. For those communities
that are able to tap the existing program, BEDI is one of the
most flexible Federal resources available for brownfield
purposes.
Unlike EPA's grant programs, BEDI funds can be used for the
full range of redevelopment activities, everything from cleanup
to construction. BEDI funds can address petroleum and other
types of contaminants that are still problematic for EPA, even
with the new brownfields law. And my prepared statement gives
examples of how BEDI has brought significant benefits to cities
like Camden and Syracuse and Lorraine, Ohio. There's no
question that BEDI has been a vital component of brownfield
revitalization strategies in those cities that have been able
to access the program and its resources.
Those successes notwithstanding, HUD has not seen the level
of grant application activity that one would expect, given the
tremendous need. And as is clear from today's hearing, the most
critical issue, and the one that H.R. 2941 addresses, is the
required linkage of BEDI to the HUD Section 108 loan guarantee
programs.
By decoupling these programs, H.R. 2941 would make a
significant change to this program, with good potential
benefits. Clearly, this decoupling is needed. As you know, BEDI
grants can't be awarded unless communities also apply for and
receive a companion Section 108 loan guarantee. In practice,
this adds complexity and time demands to projects. These are
key disincentives for small and mid-sized cities that just
don't have the staff capacity to prepare and push dual
applications, and it also discourages small projects, because
the effort and cost of structuring and securing a Section 108
loan guarantee reduces its usefulness. This linkage requirement
has proven difficult for many entitlement cities and counties
to meet, as we've heard from other witnesses. Even if they
haven't reached their legal limit on 108, economic and
political constraints effectively prohibit their use of this
program, and this makes needed BEDI resources inaccessible.
There are several reasons for this, and I just want to
briefly touch on them. From a fiscal standpoint, bond rating
agencies have viewed Section 108 loans as municipal debt, and
this is a sensitive issue in many places. Some cities have debt
caps, which are defined by statute or financial rules, and this
helps to discourage the use of 108. And in other communities,
as Mayor Reid has pointed out, using the 108 proceeds for local
loan funds or infrastructure development forces cities to rely
on CDBG as backstop to pay down their Section 108 debt, and a
lot of cities just don't have the capacity to take on this kind
of debt without jeopardizing their basic block grant
activities.
As we have heard, from a practical political standpoint in
many cases, mayors and city councils find it impossible to
pledge future CDBG grants as collateral for these projects,
even though we know that HUD has an outstanding record of
application review and underwriting.
I want to focus on the issue of small cities, because they
face insurmountable obstacles to accessing BEDI resources,
again first and foremost, because of this required connection
to Section 108. By law, they don't get their own entitlement
grants. They can't offer anything to meet the 108 collateral
pledge. And while in theory they can work through their States
or urban counties, in practice, those entities are resistant or
even hostile to these kinds of efforts.
To date, only a handful of small cities have been able to
make the Section 108 brownfield connection. This is even as the
need for brownfield financing resources in smaller and mid-
sized cities grows. A couple of States, notably Connecticut and
Washington, are trying to make an effort to work with their
small cities, but I want to give you an example from one State,
Massachusetts, which is really very typical of the national
situation. Massachusetts has 370 incorporated non-entitlement
towns. Many of these have brownfield sites, but none of them
have ever gotten a Section 108 or a BEDI, so decoupling is
really the critical issue that H.R. 2941 would address. It
would open up the program to thousands of communities with
significant brownfield reuse opportunities. I would urge the
subcommittee, as this goes forward, and this comes into place,
to really keep an eye on the changing demand for BEDI
resources, because I really believe that a more flexible, more
widely accessible BEDI program will intensify interest in this
program.
I have pointed out other benefits in my prepared statement.
I know my time is running out. I just want to focus on one last
point. H.R. 2941 specifically authorizes appropriations for
BEDI. This is critical, because it will reiterate Congress's
support for this key initiative. I would like to emphasize, as
several Members have suggested, that the resources dedicated
for BEDI should not be taken from the larger CDBG program.
Since BEDI was first funded, it has been defined as a separate
item in the budget and carried out in accordance with HUD's
mission, and I think this approach is the right one to take. So
to close I just want to again reiterate what Congresswoman
Maloney said, the ideas put forward in H.R. 2941 are shared by
many other Members of Congress. Representatives Quinn, Meehan,
Mcovern, and McHugh have introduced H.R. 2064, which would also
address the decoupling issue. On the Senate side, Senators
Levin and Jeffords have introduced S. 1078 with a similar
objective. This all shows that support for this kind of change
to BEDI is bipartisan, it's significant, and I thank you for
the time.
[The prepared statement of Charles Bartsch can be found on
page 44 in the appendix.]
Chairwoman Roukema. Thank you.
Now we have Mr. John Murphy, Executive Director of the
National Association for County Community and Economic
Development.
STATEMENT OF JOHN C. MURPHY, EXECUTIVE DIRECTOR, NATIONAL
ASSOCIATION FOR COUNTY COMMUNITY AND ECONOMIC DEVELOPMENT
Mr. Murphy. Thank you, Madam Chairwoman, for inviting my
testimony here this morning. I am the Executive Director for
the National Association for County Community and Economic
Development, or as the acronym has it, NACCED. We are an
association of practitioners that administer at the urban
county level the community development block grant, HOME and
other related programs. I'm also appearing today on behalf of
the National Community Development Association, which is an
affiliate of the U.S. Conference of Mayors. It includes city
governments that administer those same programs. The mission of
each of the organizations is to improve the technical
capacities of cities and counties, to administer a whole range
of affordable housing and neighborhood revitalization programs.
So you have combined in our two membership really the bulk
of the entitlement CDBG communities. I'd like, at the outset,
to offer the enthusiastic support for this bill, in particular
the decoupling of the Brownfield Economic Development
Initiative Grants from the requirement that a community also
apply for a Section 108 loan guarantee.
I recently surveyed our NACCED members as to whether this
created an impediment in their moving forward on brownfield
activity, and, in fact, discouraged them from applying for a
brownfield EDI Grant, because of the coupling with 108. I found
at least nine counties across the country, ranging from
Cuyahoga County and Hamilton County in Ohio to Westchester
County, New York, to Clark County, Nevada. these counties had
said that, because of the required coupling of the two
programs, they had not applied for that assistance.
I think the reasons are threefold. First, they didn't want
to pledge future block grant dollars to pay for the 108.
Second, they wanted to use perhaps other funding and it was
non-HUD funding or non-CDBG or 108 guaranteed funding. Third, I
think many communities have been discouraged from applying for
108, quite frankly, because of the lengthy processing time that
HUD takes in approving 108 loan guarantees. As you know, in
financing many development projects, timing is everything.
We also support the bill's language that would clarify that
brownfield redevelopment and cleanup is an eligible CDBG
activity.
I must say, Madam Chairwoman, I'm as confused as you are
about the provision that calls for the creation of a loan pool.
I'm not sure whether that's a separate guarantee of private
sector loans or whether it's an opportunity for HUD to buy
these private sector loans and create, in effect, a secondary
market. I think that provision, as you rightly point out, needs
some clarification. I would urge the subcommittee to act
expeditiously on this. We look forward to its enactment by the
Congress.
Thank you.
[The prepared statement of John C. Murphy can be found on
page 65 in the appendix.]
Chairwoman Roukema. Thank you. I don't think we can get
both in before we go for our vote on the floor, but we will
hear Mr. Robert Colangelo. He is the Executive Director of the
National Brownfields Association. You've see, I've learned
something today. I didn't know there was such an association.
We welcome you here.
STATEMENT OF ROBERT COLANGELO, EXECUTIVE DIRECTOR, NATIONAL
BROWNFIELD ASSOCIATION
Mr. Colangelo. Thank you, Madam Chairwoman and
distinguished Members of the subcommittee for inviting me to
present my views on H.R. 2941. In my capacity of Executive
Director of the National Brownfield Association, I work with a
wide range of property owners, investors, developers, service
professionals and representatives of the public sector, and I
hear their concerns daily about the issues regarding the
redevelopment of brownfields. I also founded Brownfield News
Magazine and I also manage Brownfield Development which holds
title to a 26-acre industrial park, so I have firsthand
knowledge and experience about the difficulties and
complexities of financing and redeveloping brownfield
properties.
Simply put, I define a brownfield as a real estate
transaction with environmental personality. And the structuring
and the finance to acquire and clean up environmentally-
impaired properties remains the primary obstacle in
redeveloping brownfields. The lending community considers
brownfields high risk transactions; therefore, they are not
leveraged. And securing traditional sources of debt financing
remains difficult at best. Banks will not lend on a brownfield
until the risk is mitigated. That leaves equity and gray market
sources of capital as the primary mechanism for financing these
transactions. Both sources of capital are very expensive,
typically requiring yields in excess of 30 percent.
As the brownfield market matures, considerable experience
has been gained by both the public and private sector about the
redevelopment process. The maturing market has left few
positive value properties available that can generate returns
that warrant the use of high-priced capital. The current market
condition has also left hundreds of thousands of sites within
the confines of our cities undeveloped, due to the high cost of
private capital, poor market conditions and difficulty in
utilizing Government incentives.
As the market evolves, Government incentives will continue
to serve as a key mechanism to lower the cost of private
capital by structuring the acquisition of a brownfield using a
combination of equity, debt, and Government incentives, a
blended lower cost of capital can be achieved. The lower cost
of capital will allow more brownfield sites to be economically
redeveloped.
The government's, and particularly HUD's role in the
brownfield redevelopment process will also increase as the
market transitions from environmentally driven to real estate
driven transactions.
I've had the opportunity to work with a number of the
cities and just recently I worked with the Brownfield Office of
the City of Chattanooga, Tennessee. I think they're a great
example of the real world difficulties in using the HUD's
Section 108 Loan Guarantee and the companion EDI and BEDI
grants to promote industrial and business recruitment and
retention.
The City of Chattanooga's Brownfield Office identified the
redevelopment of abandoned industrial sites, brownfields, as an
important economic objective of the city. Actions to facilitate
this objective included the identification of projects to
stimulate economic development using HUD's Section 108 Loan
Guarantee and the companion EDI and BEDI grants to promote
industrial and business recruitment and retention. However,
implementation was stymied by four factors:
Linking the Section 108 loan to EDI/BEDI funding;
Unwillingness by the mayor's office to risk CDBG proceeds
as collateral;
Lack of local financial expertise to administer the Section
108 loan; and
Failure to produce a specific project that fits the HUD
definition of economic development.
This legislation appears to promote the responsible
redevelopment and productive reuse of brownfield properties by
removing unwarranted obstacles, specifically de-linking grants
and loan guarantees for brownfield development from the pledge
of the community development block grant funds. This proposed
change will allow more communities to have access to funding
which in turn should allow them to promote the cleanup,
transfer, and economical use of more brownfields.
Chairwoman Roukema. Mr. Colangelo, I'm sorry. You have
about a minute left, or a little less than a minute, but we are
going to have to go over for a vote now. We will return and
hopefully we'll all be here to hear your one minute or 50
seconds. Certainly the Home Builders, which we would be very
interesting in hearing their perspective on this. We'll be
returning very shortly. We have one or two votes. It's a
question as to whether there are one or two votes, but we
should be back within 15 minutes or less.
[Recess.]
Chairwoman Roukema. I believe we'll get started here, again
resume our hearing. I feel compelled to make a comment to you,
however. For the whole panel, the fact that there are so few of
us here today is no indication that people are not interested
in the subject or what you're saying; it's a competition with
other committees. However, if it were highly controversial,
they would all be here ready to question to you. It's a
reflection of the fact that this has been so well-received by
all Members of the subcommittee, but again I am confident and
I'm assured that the Members and their staffs will be going
over your testimony here today, but I didn't want you to feel
as though the panel here was not important today. It's very
important. But it's also a reflection that the Members are
wholeheartedly for this legislation and supportive of what
we're doing here today.
With that having been said, Mr. Colangelo, I believe you
have at least another minute to summarize your statement.
Mr. Colangelo. Thank you. I guess in summary, this
legislation is another step in the right direction toward
fostering the participation of a wide range of stakeholders,
the owners, the developers, the investors, service
professionals and the public sector and community
representatives in brownfield redevelopment.
Moreover, the bill would allocate resources to promote
partnerships between the public and private sector and
encourage reuse of brownfield redevelopment. I think this bill
puts HUD back into the brownfield business and whether you'd
know it or not, part of the other positive benefit is we've
really created a new market here, a domestic emerging market
and that's the brownfield industry.
Thank you very much for inviting me and listening to my
comments.
[The prepared statement of Robert Colangelo can be found on
page 53 in the appendix.]
Chairwoman Roukema. Thank you very much.
Mr. Kasko, I believe is regional sales manager and has a
lot of experience in real estate, and in home building, Avis
America. But you're here today testifying on behalf of the
National Association of Home Builders and I know we're all most
anxious to hear your observations.
STATEMENT OF CHARLES KASKO, REGIONAL SALES MANAGER, AVIS
AMERICA, ON BEHALF OF THE NATIONAL ASSOCIATION OF HOME BUILDERS
Mr. Kasko. Thank you, Madam Chairwoman. I'd like to thank
you and Members of the subcommittee and Congressman Miller for
having us here today to address you on behalf of the more than
205,000 members of the National Association of Home Builders to
express our support for H.R. 2941, the Brownfields
Redevelopment Enhancement Act.
My name is Charlie Kasko. I'm a member of the association,
and I'm also the Chairman of the Federal Government Affairs
Committee for the National Association of Home Builders. I'm
from Shaverton, Pennsylvania. I'm a regional sales manager for
Avis American. We are a division of Excel Homes. We operate in
20 States in the Northeast and build approximately 1,400 homes
a year through a network of independent builders.
Brownfields redevelopment, if it's done correctly, presents
a unique opportunity to marry economic development with the
principles of smart growth and environmental protection.
Additionally, brownfields redevelopment is consistent with the
notion of reestablishing our communities. Many brownfield sites
are located in urban areas or close-in suburbs within walking
distance or in close proximity to existing amenities such as
restaurants, shops, and the arts. This proximity both fosters
the sense of community and satisfies the increasing needs of
our population while helping to satisfy the need for safe,
affordable housing.
For example, in my home State of Pennsylvania, the city of
Pittsburgh has partnered with local builders and developers to
redevelop a 42-acre site on the banks of the Allegheny River.
Once a heavy industrial site, Washington's Landing will now be
a stand-out in full community complete with townhomes, an
office park, a rowing club, tennis courts, a marina, a public
park and a bike path.
NAHB has always held that the first priority when
addressing brownfields redevelopment must be relief from
Federal liability and enforcement for innocent parties under
environmental statutes. The recently enacted Brownfields law
was a good first step in meeting this priority. Unfortunately
the new law fails to grant liability relief to innocent parties
for sites contaminated with petroleum, because approximately
half of the brownfield sites in this country are contaminated
with petroleum. The absence of petroleum liability protection
potentially leaves thousands of desirable sites undeveloped.
While we remain hopeful that Congress will address this
short-coming in the new law, we continue to be supportive of
the efforts to provide Federal aid for the redevelopment of
brownfield sites. NAHB is confident that H.R. 2941 will
complement the new brownfields law by removing the barriers to
valuable Department of Housing and Urban Development funding
for brownfields projects.
Grants under HUD's Brownfields Economic Development
Initiative are designed to provide governments with a flexible
source of funding to pursue the redevelopment of brownfields
through acquisition of land, site preparation, economic
development, and other activities. However, access to these
funds under current law requires a local government to pledge
future allocations of Community Development Block Grants as
collateral. Many of the communities with the greatest potential
for reclaiming brownfields are unable or unwilling to pledge
their CDBG funds in this manner, as we've heard so many times
here this morning.
H.R. 2941 would remove these leveraging requirements and
open the door to BEDI to spur much needed economic development
and affordable housing production. In addition, 2941 would help
clear up confusion and uncertainty regarding the eligibility of
brownfield initiatives for CDBG funding. The bill would ensure
that the redevelopment of brownfield sites is a permissible
CDBG activity.
This clarification is important. CDBG funds are the chief
means used by State and local governments in harnessing public
and private investment to address community development needs
by explicitly listing brownfields redevelopment activities as a
permissible activity for the CDBG funding. 2941 will ensure
that they have the ability to integrate such efforts as part of
a broader community development initiatives.
Finally, H.R. 2941 gives the HUD Secretary the ability to
establish a pilot program for the development of a loan pool
that would provide economic development financing for eligible
public entities. Cities will now be able to expand their
redevelopment options by leveraging funding from private and
public sources with the funds from the loan pool.
Madam Chairwoman, on behalf of the homebuilding industry,
I'm pleased to support H.R. 2941 and look forward to answering
any questions that you may have.
[The prepared statement of Charles Kasko can be found on
page 60 in the appendix.]
Chairwoman Roukema. Thank you very much. I do want to just
restate the fact that I think that the way we have come
together here is quite remarkable, but perhaps maybe we're long
overdue. I want to again congratulate Mr. Miller, my colleague,
for taking this initiative. Certainly all three of these
issues, whether it's jobs, housing, and environmental concerns
are a top priority of mine and I believe a top priority of the
vast majority of people on this subcommittee, both the
subcommittee and the Full Committee, and the fact that Mr.
Oxley, our Chairman, has paid such close attention to testimony
here today, is an indication I believe that we all want to move
with Mr. Miller, with Mrs. Maloney, to move ahead and expedite
consideration of this legislation in a form that can be taken
to the floor.
With that, I'll yield to my colleague, the prime sponsor of
this legislation, Mr. Miller.
Mr. Miller. Thank you, Madam Chairwoman.
Mayors Reid and Kalisz, you both touched on something that
I think is very important. That's the competition for CDBG
funds within the community. I think, Mayor Reid, that you said
that your median income is $22,000, so you have a lot of low-
to moderate-income individuals and the need for those funds is
tremendous within organizations and the linkage between CDBG
funds, BEDI, the guarantees, have really impacted your ability
to deal with brownfields.
Do you see an opportunity, if this bill becomes law, for
your implementation in dealing with brownfields locally?
Ms. Reid. We absolutely do, Congressman Miller, because
right now, we get $1,190,000 a year. Out of that you take admin
of 20 percent. The balance of it right now, we do have a 108
loan that we took out to buy 100 acres of land to develop out
around our airport. The problem is it takes another $250,000 of
our 108 dollars of our CDBG dollars to pay that back. Until we
can continue to develop that land out there and get this paid
back, we are stuck with that. That leaves us about $600,000 to
do all of the rest of the city. We've almost got it paid off,
but we would never do it again for that very reason, because
we've got nine council people all vying for money for their
wards where there's a lot of low, substandard housing, elderly
housing projects, all of the things that we need to do in our
city. We have a decaying inner core. We're an old Rust Belt
city and taking that money and going back to my council again
and asking them to do another 108 loan, Congressman, is not
going to work. We can't afford to take that away from our
citizens.
Mr. Miller. So this program, if enacted, would benefit your
city and would be something you would take advantage of?
Ms. Reid. Absolutely. Just get it passed, sir.
Mr. Miller. Mr. Murphy, you talked about the State of
Massachusetts has never been able to use HUD grant funds for
this program because of the complexity of the process of the
loan application process in 108. Is that correct, with the
National Association of Counties?
Mr. Murphy. Actually I believe it was my colleague to my
right here.
Mr. Bartsch. It was actually me, but that is correct,
Congressman. Again, it gets into decoupling issues. Again, in
theory, small cities can take advantage of this because there
is a process in the law that allows that, but again in practice
at the State level, the same kind of constraints that Mayor
Reid points out happen at the State level. States are concerned
about the impact on their future allocations. They're concerned
about how existing resources may be distributed to the many
small cities within a State and many of those States, and again
I use the example from Massachusetts, because I was able to get
some numbers yesterday on that, many States just have decided
that they can't do this, they can't do a 108 for brownfields
for the very reasons that Mayor Reid pointed out.
Mr. Miller. So eliminating that requirement and simplifying
the process, as we're doing here, you see a major benefit?
Mr. Bartsch. I see a major benefit. One of the things that
I do is brownfields outreach for a variety of cities. In the
last year, I probably have been to 20 cities mostly in New York
and New Jersey, small cities, and when you talk about this
issue, the inaccessibility of this program comes up almost
every single time. I think there's tremendous demand for this
once this gets through.
Mr. Miller. So linking this between the agencies for home
builders, once the contamination issue is resolved and the
funds are there where a developer can come in then and purchase
the site, which frees the local agencies up from the debt
they're dealing with, there could be a benefit tremendously for
jobs in this country too. Is that not true?
Mr. Kasko. That's absolutely correct, Congressman. We're
always looking for new sites and for development sites. This is
great potential, especially in the affordable housing arena for
us to look at the sites. But the funding as well as the
liability are two major issues. We've addressed a portion of
one. We need to continue on the same path.
Mr. Miller. And moving in this direction in the areas that
these would be used, most home builders have difficulty dealing
with the process because they want to development mainly in
green areas, let's say, that are undeveloped. Lacking
infrastructure, the costs are tremendous. Many people in areas
like that don't want growth to occur, but these are inner
cities, blighted areas where growth is needed because you're
basically cleaning the environment and putting it to a better
use, and basically revitalizing the local government through
taxation. Is that not correct?
Mr. Kasko. That is absolutely correct. This is a large
component of our smart growth plan. While it's not exclusive to
it, but revitalizing and redevelopment of the urban centers it
has been long understood that to encourage development within
the Urban areas, there's a number of issues that have to be
addressed on what I like to call livability, and brownfields is
a major part of that livability aspect, not just the schools
and the infrastructure, but also the environment in which the
people are living, and if you start cleaning up these sites,
you're going to change, if you will, the image of the urban
centers and hopefully be able to revitalize them like so many
of us are trying to do.
Mr. Miller. I want to thank all of you for your testimony.
It's been really helpful. As the Chairwoman said, the reason we
don't have a lot of people here is because obviously they
support the bill or they'd be here complaining, griping and
bellyaching, so I want to applaud you for taking your time and
coming here to Washington to give us this expert testimony.
Thank you very much.
Chairwoman Roukema. Thank you.
Welcome back, Mr. Chairman. I acknowledged your intense
interest in this in the context of hopefully being able to
expedite this through the Committee, and caring for it. We'll
leave that up to you to make your own statement and
observations here.
Mr. Oxley. Thank you, Madam Chairwoman.
Again, welcome to all our panelists, particularly Mayor
Reid. Mayor Reid, you are to be congratulated on receiving the
Great American Mainstreet Award. That's quite an achievement.
It clearly puts Mansfield in a position to be one of the
leaders and continue to be one of the leaders in the whole
development area.
It was interesting that in your prepared testimony, you say
under the heading of ``Challenges'' complex is synonymous with
brownfield redevelopment, and indeed I suspect that everybody
can share that same frustration as we try to work our way
through some of these difficult issues with the various leaders
of government and involvement of the private sector, and the
like.
I'm wondering, part of this bill deals with revolving loan
funds. Has Mansfield had experience overall with revolving loan
funds? If so, are they useful in putting financing projects
together?
Ms. Reid. We use revolving loan funds on two levels. We
have revolving loan funds for our downtown redevelopment. As
you know, we have been able to put together a pool with the
local banks and with some city dollars. That is a loan to small
business people trying to get started and do something
downtown.
Then we also, as you know, were awarded a million-dollar
grant which will be a revolving loan fund for brownfield
remediation. That one is just getting started. And Congressman,
as you know, the paperwork to get through this is about this
high. We are trying to wade our way through it. We had a very
nice young man from EPA in Chicago come in and tell us this was
going to be really easy, and we believe him. So we're going to
hope for the best. But again that will be a revolving loan
fund. We also use our CDBG dollars into a revolving loan fund
for the purpose of loaning money to landlords to do rental
rehab which then is paid back to us, which we use to loan to
another landlord to rehab another house. So in the ways that we
use our CDBG money, you can see how important it is that we
don't tie it up with a commitment to 108 dollars.
Mr. Oxley. That's a good point. Clearly, the impetus behind
this legislation CDBG has been appropriate in many indications.
For example, Holiday Inn at Mansfield was begun with CDBG money
and obviously turned out to be quite successful and anchor that
area downtown with a renaissance theater next door, it became a
perfect opportunity for the city to really put its best foot
forward. Yours and past administrations were involved in that
area. It was most appreciated. It was also most helpful to look
at the profile of the former Ohio Brass, just to use one
example. And the income sources that you have laid out, would
we expect, let's say that we were to start all over again with
Ohio Brass, would the passage of this legislation and the
legislation that passed earlier last year, Representative
Gilmore's bill that I mentioned, what would change in that
overall structure of financing and putting this package
together.
Ms. Reid. First of all, that project has been a long time
coming. We've been working on it, as you know, almost ever
since I've been Mayor. It's been a project that we've really
had to struggle to get the dollars for. We are very proud of
the fact that we were able to get the former owners to
contribute dollars. The project would probably have been
speeded up by a minimum of 2 years, and maybe a maximum of four
if we could have had access to other funding that we wouldn't
have had to pledge our precious dollars to.
We did have to scratch for money out of our general fund to
cover part of it. When we take money out of our general fund,
as you know, Congressman, it means that we have to look
somewhere else to find money to pay our police and fire and to
run our city. So in reality, the Ohio Brass project, if we
would have had in place what we are now talking about and what
Congressman Gilmore's bill did a year ago, we would not have
had to take our precious general fund dollars in order to make
this. But we were so committed to getting this done that
there's other things we could have done with that money. A new
fire station would be nice. But, you know, we put those things
off because we had to make a commitment to do what we did at
Ohio Brass.
Mr. Oxley. That's a great case example of what can be done,
and obviously with passage of this legislation, and the Gilmore
bill working together facilitates a lot of these things even
better.
Madam Chairwoman, I thank you for your time. And let me
just say to you that this bill appears to have broad bipartisan
support and we would plan to put it on a fast track. And it's
important I think that we send a strong signal and get a bill
over to the other body soon enough that they can act on it and
we can get it to the President. Coupled with what has already
been accomplished on the liability side, this is a natural, and
we're planning to move with as much speed as we possibly can on
that.
And I yield back.
Chairwoman Roukema. I thank the Chairman and I thank him
for his exceptional leadership on the Committee of the whole as
well as for the subcommittee. I do thank the panelists. You've
made an excellent case and again I assure you that your
testimony will be made readily available to every Member of the
subcommittee and the Full Committee.
If you have further comments or additions, you have a 30-
day time period to put it in the official record. Thank you
again. We look forward to this being a major piece of
legislation in this Congress. Thank you.
[Whereupon, at 12:40 p.m., the hearing was adjourned.]
A P P E N D I X
March 6, 2002
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